Financial Literacy Month: A Time to Spring Clean Your Financial House

The entire month of April is dedicated to raising financial awareness. Its purpose: to highlight the importance of financial literacy and teach Americans how to establish and maintain healthy financial habits. Borrowing from the idea of spring cleaning which also usually starts for most people in April, this makes April the perfect time to put your finances in order and take charge of your financial destiny.

This is especially important considering the reports on Americans’ financial preparedness for life events are less than encouraging.  Americans are not saving for rainy days, Americans are delaying retirement due to lack of financial readiness and are afraid of outliving their money, Americans haven’t started saving for their kids’ college education, Americans are dipping into their retirement fund to shield their kids from student loan debt, Americans regret not saving for retirement sooner, Americans are… and the list goes on.

If any of these describe your situation or you’ve tried but can’t seem to find success because of financial missteps, now is the time to try again.

“Don’t feel alone if you’ve committed a financial blunder,” Jim Chilton, founder and chief executive officer of the non-profit Society for Financial Awareness says. “Two-thirds of Americans have made a significant money mistake somewhere along the way. Since April is National Financial Literacy Month, this is a good time for anyone to pledge to do a better job handling money.”

In keeping with his organization’s mission to “eliminate financial illiteracy, one community at a time,” Chilton says: “One thing I always tell people is that you can’t let your emotions get in the way when you are trying to meet your financial goals. When it comes to finances, there is always going to be at least a little uncertainty.”

According to Chilton there are a number of blunders that can stand in consumers’ way of becoming financially stable. If avoided or corrected can lead to financial stability.

Here’s how:

Many live without a safety net – change that. If you haven’t already, include saving for emergencies in your budget. Unexpected expenses like major medical problems rear their heads without warning and there’s no telling when you may lose your job.  Chilton recommends a six to 12-month cushion that would cover your mortgage, groceries, utilities and the other necessities of day-to-day living should any emergencies occur.

Check your credit report regularly; failing to do so can cost you time and money. Chilton says, 70 percent of credit reports contain some sort of error and identity theft is on the rise. What’s more, close to 15 million people fall victim to identity theft each year in the United States which – by the way – may take many years and dollars to clear.  Make it your duty to check your credit reports annually to make sure you’re not a victim.

Give more thought to retirement. Many people fail to properly prepare for retirement. Some think that Social Security will take care of them in retirement but the reports indicate Social Security may run out by 2030 leaving our pockets dry. Chilton says, Social Security is designed as supplemental income, not something that can replace your entire paycheck. You need to plan and save to make sure you can lead the lifestyle you want in your golden years.

Use credit cards sparingly, and pay down any debt you may have. It’s hard to refrain from using the cards especially since they are readily available but using cash as often as possible can help keep you from racking up credit card debt. “Credit seems to rule, but cash should be your real king,” as Chilton puts it. Credit card debt in America is more than $800 billion and the average American households owes over $15,000; on average credit card holders owe at least $7,000 in credit card debt. Chilton says making a conscious effort to use cash will help wean you off your reliance on plastic.

Do your due diligence when seeking advice. Seek the counsel of a trained professional who will act in your best interest and not theirs. Ask whether they work on commission or not. Chances are if they work on commission they might be offering advice that yields a higher return for them not you.  “Before you pick someone to help you with investments, do your homework because you want someone with a good reputation,” Chilton says. “Check with the Better Business Bureau and do a Google search to see what else you can learn.”

Financial problems may not go away in a snap – exercise patience. Chilton says financial problems that took years to create aren’t going to be fixed overnight. So ease into your new financial plan. Instead of a dramatic overhaul that could leave you frustrated, try to make small changes that will lead to larger commitments.

He continues:

“Even as we get older and presumably know more, we are still bound to make a misstep here or there. We simply can’t know it all, especially when it comes to our finances. But if we realize our limitations, we can at least learn to make fewer mistakes and do a better job of setting and meeting the goals we have for our money.”

Folks, may April be the month you achieve or otherwise embark on a journey of achieving financial stability.